Ranger Incorporated made the following errors when counting inventory on December 31, 2021, December 31, 2022, and December 31, 2023:

• Inventory on December 31, 2021 was overstated by $655,000

• Inventory on December 31, 2022 was understated by $15,000

• Inventory on December 31, 2023 was understated by $35,000

Given the errors above, determine whether the items below are a) correct, overstated or understated and b) by what amount.

1) Effect on net income for the year ended December 31, 2021.

2) Effect on cost of goods sold for the year ended December 31, 2022.

3) Effect on retained earnings as of December 31, 2023.

4) Effect on beginning inventory on January 1, 2024.